US government still pausing the Corporate Transparency Act enforcement, despite US Supreme Court win

The US government announced that it continues to pause mandatory beneficial ownership information filing requirements with the Financial Crimes Enforcement Network (FinCEN), despite the Supreme Court of the United States granting the government’s motion to stay a nationwide injunction issued by a Texas federal judge.

In the latest installment of the Corporate Transparency Act (CTA) enforcement saga, on January 23, 2025, the Supreme Court of the United States issued an order granting the stay requested by the federal government in Texas Top Cop Shop, Inc. v. McHenry (formerly, Texas Top Cop Shop, Inc. v. Garland).

The CTA is a US law that mandates certain businesses to disclose information about their beneficial owners to FinCEN, aiming to combat money laundering and other illicit activities by increasing transparency around business ownership structure. See our overview of the reporting requirements and common pitfalls under the CTA, "New year, new reporting requirements."

Justice Neil Gorsuch, who concurred in the grant of the stay, stated that he would go beyond granting the stay and hear the case now to more definitively resolve the question at hand. Justice Ketanji Brown Jackson dissented, noting that “emergency relief is not appropriate because the applicant has failed to demonstrate sufficient exigency to justify our intervention.”

The US Court of Appeals for the Fifth Circuit has oral arguments scheduled for March 25, 2025. 

Though the Supreme Court’s order would seemingly allow for enforcement of the CTA while its merits continue being debated, submission of beneficial ownership information still remains voluntary. On January 7, 2025, the US District Court for the Eastern District of Texas granted the plaintiffs’ motion for preliminary relief in Smith v. U.S. Department of Treasury. Although the injunction only bars enforcement of the CTA against the plaintiffs, the US District Court for the Eastern District of Texas stayed the effective date of the CTA’s Reporting Rule more broadly while the lawsuit is pending, effectively no longer mandating compliance for reporting companies.

FinCEN has acknowledged the Supreme Court’s order, highlighting that the nationwide Smith order remains in place, and that reporting companies are not currently required to file beneficial ownership information despite the Supreme Court’s order. FinCEN is still accepting voluntary submissions.

While these issues continue to be argued on the merits, reporting companies should be prepared to comply at short notice with reporting requirements and submit their beneficial ownership information to FinCEN to avoid any penalties, should any of the ongoing litigation result in a conclusive ruling that the CTA is enforceable nationwide.

For more information on the zig-zagging of the previous court orders, see “Corporate Transparency Act reporting requirements on pause...again.” For more information on the injunction, see our prior analysis in "A Texas-sized injunction for the Corporate Transparency Act." For more information on the reporting requirements and common pitfalls of the CTA, see "The Corporate Transparency Act is here—are you ready?" and "New year, new reporting requirements."